Investing in art?

Does anyone in invest or art.

I have known people invest in wine to mixed results.

The idea in investing in art appeals to me. I wonder if they are an easy ways to invest and if anyone has done it.

Thanks kind regards, Ben.

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I’m absolutely sure I would have negative ROI. And a lovely meal

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Many years ago I tried investing in art, I bought some limited signed prints by Rolf Harris.

I don’t invest in art anymore.

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In terms of investing outright I don’t really know, but there is an app called Saatchi Art that helps you find art… kind of the same?

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If you buy prints, buy them because you like them, not because you see them as an investment.

In fact, the same could probably apply to the art you do hope will give you a return later down the line - buy art you like, so you’re not too upset if you’re left holding something.

As far as other things to think about go, it took a few days but I was eventually able to find a Guardian article I remembered reading about buying artwork from graduation shows.

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Thank you, that is a very interesting article from the Guardian.

Some of the increases in value for art in that article are mind boggling.

I actually have a original photo print of Lance Armstrong, being a bit of a sport nut.

Doubt the is any value in it anymore. But I am rather fond of alternative investments and ideas it appeals to my personality.

One of the core rules of buying shares is “don’t get emotionally attached to a company”.

Yet when people talk of investing in art (or wine etc.) I hear the phrase “buy what you like because at least you won’t be upset if it doesn’t go well”.

That’s not investing, that’s collecting. Don’t invest in art that you like, invest in art you think is going to give you a good return. And if it doesn’t give a good return cut your losses, just like you would with a stock holding.

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Mental note for future self

Step 1
Invest in wine. As many bottles as possible

Step 2
Drink it at your own leisure

Step 3
Use the bottles to make an installation

Step 4
Sell it

Step 5
Rinse and repeat

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One of the core rules of buying shares is “do your research, and if you have particular knowledge of an area that would help, make use of it.”

I would argue that’s the better analogy for ‘buy art you like’ in this case. You’re making use of your art knowledge. If it’s something you like, then unless your tastes are severely out of whack, there’ll be a market for it somewhere - and you may well know where to find it.

And I absolutely allow for a degree of being upset if it doesn’t pan out - your paraphrasing of what I said is a misrepresentation. I mean, you yourself say “And if it doesn’t give a good return cut your losses”, which is not at all different from what I said, other than it’s a little easier to cope with the cutting of the losses when you know you’ve at least got some appreciation for it.

Is that more collecting than investing? That’s a fair enough comment. I would say you have to - on some level - be a collector first before an investor, because otherwise you won’t have the knowledge to judge the market and make good decisions.

I’ve known people - multiple people - own art they thought was dogshit but purchased because they also thought there would be a market for it. Only to find they couldn’t sell it because i actually was dogshit. This would be where buying what you like - or buying what you know - has an advantage.

Perhaps another way of putting it, that threads a line between what I’ve said I what you’ve said and draws the two sides together, would be:

Like any investment, do your own research.

(Which is to say, there’s a world of difference between thinking “This is dogshit but somebody might like it and I wouldn’t want to miss an opportunity”, and “This is dosgshit but it’s dogshit I know there’s a market for and that I can capitlise on”)

Might be worth looking at something like Feral Horses* where you can buy shares in art. Their current investable art projects are

They had a interesting campaign recently of Habemus Hominem by Jago which is bust of Pope Benedict XVI which now trading +38% on their secondary market. Most of the other artworks on their secondary market are flat, or have depreciated.

*Referral link. You can bypass this by clicking here. To be honest their referral program isn’t very enticing.

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"Francis I of France paid 4,000 ecus in 1540 for Leonardo da Vinci’s Mona Lisa. On the off chance that a few of you have not kept track of the fluctuations of the ecu 4,000 converted out to about $20,000.

"If Francis had kept his feet on the ground and he (and his trustees) had been able to find a 6% after-tax investment, the estate now would be worth something over $1,000,000,000,000,000.00. That’s $1 quadrillion or over 3,000 times the present national debt, all from 6%. I trust this will end all discussion in our household about any purchase or paintings qualifying as an investment.

“However, as I pointed out last year, there are other morals to be drawn here. One is the wisdom of living a long time. The other impressive factor is the swing produced by relatively small changes in the rate of compound.”

Warren Buffett, “Our Performance in 1963”, p. 4-5, 18-1-1964

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Art is fascinating, especially how paintings are authenticated, valued etc. For a interesting read check out the history of some of Da Vinci’s paintings, maybe start with Salvator Mundi which is the most expensive painting to ever sell at auction. Yet there’s doubt amongst art experts about whether this is the “official” one by Da Vinci. There’s also a few different versions of Mona Lisa, from what I recall he never did complete the Mona Lisa, it was something he was constantly working on.

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These kind of statements are meaningless. how can you get 6% on an amount that no one in the world can afford 6% of? that would only be possible with hyperinflation

That is absolutely brilliant, exactly the type of thing I was looking for.

This forum really is great, I am not logged in a lot of the times I am reading on here but I learn something every time. Great to get ideas and links of knowledgeable people.

Thank you for the link.

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I found this quite interesting as I am an artist and an Art teacher. If you are going to invest in any art I would ensure the name is already collected or in ascendancy. Your best bet is to investigate galleries that represent artists. Looking at the post relating to the horse site I was a little bit dubious as its not like buying a horse it is actually buying art and it won’t sell on that often. I would also investigate art car boot sales and these kind of markets as you will pick up value there.

It’s an interesting concept buying shares in a picture. I would be more than happy of course for you to buy my work :slight_smile: or shares in it

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I pretty much doubt it would be possible at all. How much are we talking about?! 6% of $1 quadrillion?! That’s $60 trillion. In 1964.

If we use this online calculator

We get $495,760,645,161,290.25. $495 trillion. I don’t think that can be achieved either. But that besides the point.

The point is:

Time in the market + magic of compounding = stellar, incomprehensible returns

Vs

“Investing” in art

One can argue art has value beyond the economic and financial realms. I agree with that view. But that misses the point. The author was selected by its partners to deliver economic and financial returns to them. And in order to achieve it, the author considers paintings to be of no use. Why? Because he believes he can achieve better than 6% after taxes. Has he?!

One can also argue that long before getting to the $1 quadrillion mark, the sensible investor would increasingly find himself being unable to find investable assets that would produce 6% after taxes. He would then start hoarding in the hopes for better days to deploy his minions and would start financing charities?! Has he?!

Mayhaps if I quote a bit more text things get easier to grasp?!

“The Joys of Compounding

"Now to the pulse-quickening portion of our essay. Last year, in order to drive home the point on compounding, I took a pot shot at Queen Isabella and her financial advisors. You will remember they were euchred into such an obviously low-compound situation as the discovery of a new hemisphere.

“Since the whole subject of compounding has such a crass ring to it, I will attempt to introduce a little class into this discussion by turning to the art world. Francis I of France paid 4,000 ecus in 1540 for Leonardo da Vinci’s Mona Lisa. On the off chance that a few of you have not kept track of the fluctuations of the ecu 4,000 converted out to about $20,000.

“If Francis had kept his feet on the ground and he (and his trustees) had been able to find a 6% after-tax investment, the estate now would be worth something over $1,000,000,000,000,000.00. That’s $1 quadrillion or over 3,000 times the present national debt, all from 6%. I trust this will end all discussion in our household about any purchase or paintings qualifying as an investment.

“However, as I pointed out last year, there are other morals to be drawn here. One is the wisdom of living a long time. The other impressive factor is the swing produced by relatively small changes in the rate of compound.

“Below are shown the gains from $100,000 compounded at various rates:

4% 8% 12% 16%
10 Years $48,024 $115,892 $210,584 $341,143
20 Years $119,111 $366,094 $864,627 $1,846,060
30 Years $224,337 $906,260 $2,895,970 $8,484,940

“It is obvious that a variation of merely a few percentage points has an enormous effect on the success of a compounding (investment) program. It is also obvious that this effect mushrooms as the period lengthens. If, over a meaningful period of time, Buffett Partnership can achieve an edge of even a modest number of percentage points over the major investment media, its function will be fulfilled.

“Some of you may be downcast because I have not included in the above table the rate of 22.3% mentioned on page 3. This rate, of course, is before income taxes which are paid directly by you -not the Partnership. Even excluding this factor, such a calculation would only prove the absurdity of the idea of compounding at very high rates - even with initially modest sums. My opinion is that the Dow is quite unlikely to compound for any important length of time at the rate it has during the past seven years and, as mentioned earlier, I believe our margin over the Dow cannot be maintained at its level to date. The product of these assumptions would be a materially lower average rate of compound for BPL in the future than the rate achieved to date. Injecting a minus 30% year (which is going to happen from time to time) into our tabulation of actual results to date, with, say, a corresponding minus 40% for the Dow brings both the figures on the Dow and BPL more in line with longer range possibilities. As the compounding table above suggests, such a lowered rate can still provide highly satisfactory long term investment results.”

Warren Buffet, “Our Performance in 1963", p. 4-5, 18-1-1964.

Full letter in the link below

Successful artists are business people. I see investing in art more like activist investing – get to know the artist and their approach to the business of art. How prolific are they? How do they market themselves? Number of followers / engagement? Where is their audience? Who is on their team?

Investing in art is very different to investing in stocks. You do need a curator / collector mentality. I do only buy what I like. I only buy originals or first edition prints.

But I don’t do it for the return. I do it because I love art and I have wall space. I just target my purchases carefully.

Of course it doesn’t compound in the same way so the chance of a big return is way less likely.

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Two paintings by an instantly recognisable current artist were hanging on the wall of a boutique hotel room my girlfriend & I booked in the cotswolds.

We know very little about art, artists and the industry. These paintings (& the large distressed black frames surrounding them) caught our eyes. Fast forward 6 months to York xmas markets as we wondered the streets, the exact style of painting that we saw from the Cotswolds stay, was displayed in the window of a Whitewall gallery. We entered and told the girl how we recognised the painting and she mentioned the artist is signed to their gallery and he will be visiting the uk in Spring 2019. The date came up and we attended and met the artist Fabien Perez.

His story and journey is equal to the fascinating vibe he captures in his South American scenes, using the same few muses to paint.

The night of the event, he sold 70-80% of his work displayed and more from his incredibly large portfolio. £10,000 minimum for an original (and counting) since his big fame came from painting the pope. People snapped up 10K pieces, £20K pieces, some made multiple purchases. His work from what I see has been increasing well and has a growing celebrity customer base now around Los Angeles & New York.

Joining the artist during a chapter in his story and being able to go from a stay in the cotswolds to a gallery talking to an incredible artist and gaining our own story which lead us to the artist, totally had me sold in the way that, some things can be invested in through a computer, other things deserve the story and the memory. Although his paintings alone instantly seduced our eyes, we would never have r e a l l y known how captivating an artist Fabien Perez is.

As well as the now self-made businessman. He has truly spent the best part of his life focussed solely on his painting and you can see that the business side has been a relatively new thing for him which is where the value in his work comes to life. The gallery play a great role for him and he has all that authenticity intact.

With the knowledge from attending the artists event, I would feel happy purchasing his work.

What I learnt? Attend events. Make a memory out of it. See the value. Re-selling a signed artists painting in 25 years will be a lot simpler being able to deliver the story along with the work. IF you could part with your investment that is :slight_smile:

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Identifying good art is easy: all you have to do is look at a million pictures. Whether the good art will appreciate in value is a different question. Salute to the art collectors.